GOVERNMENT BANKING WORKS!
Jauncey, L. C.
Government Banking Works! By L C. JAUNCEY WHEN the Labor Government in Britain takes over the Bank of England, it will not be altogether Failing into unchartered seas, for one of the British...
...On regaining his health he resumed his advocacy of government banking and joined the Labor Party as the only party of that day likely to accept his proposals...
...On the other hand, private lenders could only lend the capital they possessed...
...Defenders of the bank accepted this challenge and formed "Hands Off the Bank" committees in various parts of Australia and so aroused the people to the threat to their bank...
...The bank early began to show a profit, and interest rates dropped a little with its appearance...
...King O'Malley was born in Canada, but spent his early years in the United States...
...THE new bank opened first as a savings bank, but six months later entered the field of general commercial banking in competition with private concerns...
...Then in 1943 the Labor Party for the first time since 1914 gained comfortable majorities in both Houses of Parliament and this June passed a measure doing away with the old conservative board of directors and restored the bank to the control of a governor, aided by an advisory board...
...A representative of the Bank of England, Sir Ernest Harvey, visited Australia and took an active part in this move to cripple the Commonwealth Bank...
...The new Act prohibits private banks, except with the consent of the Commonwealth Bank, from buying local, 3tate, or federal government bonds...
...During World War II the government bank was the financial instrument of the war effort and naturally it grew further in importance...
...The moving force behind this action was the Minister of State for Home Affairs, King O'Malley, who had campaigned for over 20 years in favor of such action...
...The Commonwealth Bank served its owners, the Australian people, well...
...This provision should prevent private banks from controlling the governments through the power of the creditor...
...This remark started the young O^Malley thinking about banking and he worked for 10 years in a New York bank...
...This timely action forced the Government to abandon this projected raid on the people's bank...
...In the first 20 years it had garnered for its shareholders, the Australian people, over $125,000,000 in profits, and this sum to some people looked too much to be out of the hands of private investors...
...In the '80s of the last century O'Malley went to Australia for his health, which, fortunately for Australia, flourished there...
...The general banking department is to engage actively in all types of commercial banking and the profits of the bank are to go, one-quarter to the reserve fund, one-quarter to the mortgage banking department, and one-half to the sinking fund of the national debt...
...The bank started with no privately subscribed capital, borrowing merely $50,000 from the Federal Treasury to start operations...
...When the depression in 1929 hit- Australia, conditions became so serious that the Commonwealth Bank had to step in and take over two savings banks in order to save the depositors from loss...
...It has gone ahead in spite of opposition at home and abroad...
...Private banks also cannot buy securities in the stock exchanges of Australia...
...A friendly Bank of England will make its post-war load lighter, and the success of the Commonwealth Bank will be an encouragement to those in Britain and elsewhere who feel that banking is a public utility which should be run for public welfare rather than for private gain...
...It also has the power to move into any private bank to protect the depositors...
...In New South Wales the bank saved over $250,000,000 of the people's savings by taking full responsibility for the closed savings bank's funds...
...As time passed King O'Malley became interested in government banking...
...So in 1938 the Conservative Government brought down a bill to allow the sale of stock in the bank to private investors...
...Although the bank was well established by the end of the war, the Conservatives wanted to stifle its commercial banking facilities, and with the passing in 1923 of Gov...
...By L C. JAUNCEY WHEN the Labor Government in Britain takes over the Bank of England, it will not be altogether Failing into unchartered seas, for one of the British Dominions has successfully operated a government bank for over 30 years...
...The bank is to have control over interest rates, investments, exchange, and gold...
...Should differences occur between the bank and the Commonwealth treasurer, the Government is to have full responsibility for the policy demanded...
...With the outbreak of World War I the Commonwealth Bank suddenly became the keystone of Australia's financial structure, but at the end of the conflict Labor was no longer in power and the Conservatives were entering upon what proved to be over 20 years' control of the Commonwealth Government...
...He is still alive there today...
...THE Commonwealth Bank has never closed its doors in business hours during its crisis-filled life...
...STILL opponents of the bank did not give up, and with the easing of the depression they made added attempts to throttle the competitive features of the bank...
...In 1912 the Labor Government in Australia set up the first government-owned commercial bank in the British Empire...
...The Commonwealth Bank is to exercise its powers in a way that will contribute to the stability of the currency and will maintain full employment in the nation...
...Within a year the loan was repaid...
...In his youth he had heard a British authority state that a bank note did not necessarily need backing of gold but rather the support of the nation to make it generally acceptable to the public...
...There he discovered that bankers were able to make loans of artificial capital provided they could clear their debts and credits at the end of the day...
...Miller, who had successfully launched the bank, the Conservative Government the following year passed a bill making the bank a central bank and cutting down as much as possible competition with private banks...
...His efforts were successful, when in 1912 the Labor Government, of which he was a member, established the Commonwealth Bank of Australia...
Vol. 9 • November 1945 • No. 44
